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What should replace the Money Advice Service?

Last autumn, when the Government announced that they would be replacing the Money Advice Service with a single money guidance and capability body, rather than two, we were very pleased.

As one of the first and loudest groups calling for a single body, this was a victory for us and our friends in the financial capability sector. But above all it was a step forward for people whose debts, budgeting skills, savings, pensions, and assets are all inseparable parts of complicated financial decision making, and who needed a service they could rely on to guide them through all of this.

This week, we broadly welcomed the proposals the Treasury has brought forward, but argue more clarity is needed to make sure the advantages of a single money guidance and capability body are taken. Our response to initial proposals to replace the Money Advice Service, Pensionwise and The Pensions Advisory Service expressed three main concerns:

Splitting pensions and money guidance was an artificial divide that did not recognise the increasing integration of retirement saving and wider financial management.

Money guidance was to be delivered entirely through a commissioning model, which is not always appropriate.

The loss of a public brand would mean no one-stop-shop for those with general or ill-defined money issues.

Though the current consultation is not as detailed in addressing these as we might hope, we are very heartened by the new proposals the Treasury has brought forward. With a single body, mixed model of delivery and the maintenance of a website and public brand, there is much more scope for an effective, responsive organisation that can provide for the complex financial guidance needs of people in the UK.

The decision to create a single body is particularly vital. In a world where pensions saving and retirement income is ever more linked to saving and other life-long financial behaviours, older people are participating in the labour force at ever higher rates, and government policies such as the Lifetime ISA are further blurring the boundary between general savings and pensions, it never made sense to have two organisations meeting a single bundle of needs. We are therefore delighted that the government has listened and reconsidered.

The provision made for a mixed delivery model means far greater flexibility in how the successor body can operate. We were very pleased that the bodies proposed last year would move away from providing money guidance completely in-house and would begin to harness and bolster the strengths of other organisations working in the areas. However, the complete loss of any in-house delivery would have meant inevitably that a brand would be lost, along with the opportunity to provide a one-stop-shop for all things money.

Read our full response, including our views on what the Treasury still needs to get right here.